An Above-Average Year for FHJUX

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Fidelity Advisor Europe Fund overview

Now let’s take a look at the Fidelity Advisor Europe Fund – Class A (FHJUX). FHJUX, all asset classes, was managing assets worth $1.2 billion as of February 2016. As of December 2015, its assets were spread across 79 holdings and included stocks of companies such as Shire (SHPG), B shares of Novozymes (NVZMY), Publicis Groupe (PUBGY), Lloyds Banking Group (LYG), and Sanofi (SNY). Its top ten holdings formed a shade less than a quarter of the fund’s assets.

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Fidelity Advisor Europe Fund performance

From a purely NAV (net asset value) return standpoint, FHJUX stood fifth for the one-year period until March 15, 2016, among its peer group. When we refer to the peer group, we mean the group of 12 funds chosen for this review. For return comparison, we have chosen two ETFs: the ALPS STOXX Europe 600 ETF (STXX) and the SPDR Euro STOXX 50 ETF (FEZ). Since the announcement of stimulus measures by the ECB (European Central Bank) on March 10, 2016, the fund has returned the most among its peers, making it one of six funds that has outperformed STXX and one of four that have outperformed FEZ.

For evaluating benchmark-related metrics, we’ve chosen the STOXX Europe 600 Index as the benchmark for all funds in this review.

Other metrics

FHJUX’s standard deviation, or the volatility of returns, in the one-year period until March 15, 2016, was 18.2%. This is a little lower than both the STOXX Europe 600 Index’s 19.2% and the peer group’s average of 18.4%.

The fund’s risk-adjusted returns, calculated by the Sharpe Ratio, were negative for the one-year period ended March 15, 2016. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that. The ratio for 2015 had placed it fourth among its peers.

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The information ratio, calculated with the STOXX Europe 600 Index as the benchmark, was 0.7 for the one-year period ended March 15, 2016, ranking it fourth among all the funds in this review. The information ratio shows the consistency of a fund manager along with measuring the ability to generate excess returns over a benchmark. The higher the reading, the better the consistency.

A note to investors

FHJUX’s quantitative metrics place it as an above-average performer for the one-year period ended March 15, 2016. This period covers two major stimulus announcements by the ECB over two years, both in March. Apart from consistency of returns, the fund’s alpha has also placed it fourth among its peers.

The fund’s returns have been volatile in 2016 year-to-date, and its alpha generation has taken a hit. But if you intend to spread your European investments across several funds, FHJUX could be in contention. But a longer investment horizon and portfolio evaluation would be important to study in that case.

In the next article, we’ll look at the Henderson European Focus Fund – Class A (HFEAX).

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